tv Nightly Business Report PBS November 28, 2012 1:00am-1:30am PST
a look at what the deal means for europe and american investors. >> tom: and it's "giving tuesday," a new effort to add charity to your gift list this holiday season. >> susie: that and more tonight on nbr! >> tom: a lengthy courtship finally resulted in the marriage today between conagra foods and ralcorp. conagra is paying $5 billion to buy private label food giant ralcorp. that works out to $90 a share, a nearly 30% premium to ralcorp's closing stock price on monday. the deal will make conagra the largest manufacturer of private label foods. suzanne pratt takes a look at what's become a booming business. >> reporter: it used to be consumers would buy private label products to clean their bathrooms or wash their clothes. lately, however, they're eating them, too. from sodas to peanut butter, private label brands are shaking
off the yuck! stigma and attracting value-conscious customers. and it's the popularity of private label food that's behind the tasty conagra-ralcorp deal. >> private label, otherwise known as store brands, is gaining traction with retailers and shoppers. in fact, store brands have been growing faster than branded food for some time, and we expect that to continue. >> reporter: it might be hard to believe, but store brands now account for about a fifth of all packaged foods sold in the u.s., and at 70 $billion, we're talking big business. conagra is known for name brands like pam, slim jim, and reddi whip, and it also makes some private label goods. ralcorp is the top manufacturer of growing store brand categories such as cereal and pasta, and it supplies companies like walmart and mcdonald's. together, conagra and ralcorp could become a private label powerhouse. and they might actually make store brand food that's good to
eat. >> with this acquisition, what conagra can do that perhaps ralcorp couldn't is they can bring their expertise on the branded side on innovation and r&d, and elevate even more the quality of their products from where they are today. >> reporter: that means more americans are likely to find private label foods more palatable. suzanne pratt, nbr, new york. >> susie: that big conagra deal didn't get much attention on wall street today. investors were more concerned about the debt problems in europe and the fiscal cliff crisis here in the u.s. stocks fell late today after senate majority leader harry reid said lawmakers are making little progress in resolving the stand-off over tax increases and spending cuts. the dow fell 89 points, the nasdaq lost nine, the s&p 500 down seven. >> tom: as susie mentioned, talks to resolve the fiscal cliff are moving slowly.
one reason is that there is deep disagreement over whether entitlement programs like social security and medicare should be on the table right now or not, and the disagreement is sharpest over social security. darren gersh takes a look at why. >> reporter: the number-two man in the senate democratic leadership argues any fix for social security's finances should come after the immediate challenge is out of the way. >> i think we should take social security off the table for the current fiscal cliff and deficit discussion, but be very honest about what we're going to achieve in the near term. >> reporter: republicans pushed back, arguing social security is part of the deficit problem because it is no longer taking in enough in taxes to cover the benefits it pays out. social security makes up the difference by cashing in special treasury bonds it holds in its trust fund. but conservatives point out the money to redeem those bonds comes from taxpayers. >> it is money that is coming out of general revenue that is
going into social security that reduces the amount of revenue that is available for everything from aircraft carriers and roads to environmental issues. >> reporter: legally, social security is off-budget, meaning its cash flow is not considered part of the budget deficit. and defenders argue the money used to pay off the special treasury bonds in the social security trust fund are no different than the money owed to any other bond holder. >> we're using social security as a piggy bank to deal with the problems in the rest of the federal budget. this is why we have a problem with it. we should not be cutting social security benefits to deal with a budget deficit it did not cause, nor was it a part of. >> reporter: still, social security will need to be adjusted. the gap between the taxes it takes in and the benefits it is paying out will total almost a trillion dollars over the next decade. darren gersh, nbr, washington. >> tom: while the summer drought baked midwestern fields, farm values are up. still ahead tonight, we look at
why farmland is such a hot commodity with investors. off the farm, home prices continue heading higher, rising for an 18th consecutive month, according to the widely followed s&p case/schiller home price index. the survey tracks 20 metropolitan cities, and shows home prices were up 3% year over year in september. compared to august, prices inched up three-tenths percent higher. together, analysts say the numbers add up to a long recovery for housing. >> the housing market has clearly turned the corner and is overy.n its way to r it's going to be a slow, steady, recovery rather than a booming, explosive recovery, because we still have a few years of distressed inventory we have to work through and some headwinds in the lending market. >> tom: nationally, prices are back to their mid-2003 levels. but they're still down 30% from the peak of the housing bubble.
>> susie: last summer's drought fried much of the nation's corn crop, but it didn't scorch interest in owning farmland. in many parts of the corn belt, farmland values jumped 13% over the past three months, according to the chicago fedal reserve bank. as diane eastabrook reports, a growing number of investors from pension funds to mutual funds are making farms a hot commodity. >> reporter: to a small but growing number of investors, fertile midwest farmland is the gift that keeps giving. despite last summer's drought, the value of farmland in the federal reserve's seventh district, which includes iowa and illinois, continued to increase in the double digits. jim farrell is the president and c.e.o. of an omaha-based farm
real estate firm. he says last month alone, his company oversaw more than $160 million in farmland sales. >> the level of interest was phenomenal, and we were selling them at higher prices than we anticipated they would sell at before we went into the auction. >> reporter: who's buying farmland? some are investors like these attending the chicago federal reserve bank's annual agriculture conference. while farmers still account for about three-quarters of the farmland purchased in the u.s., investors account for the rest and their numbers are growing. jon brorson manages three agriculture funds for mesirow financial that include 26 farms. he says individual and institutional investors are only beginning to realize the profit potential of farming. >> it's an asset that they fly over to florida or drive through to visit grandma. they're not used to thinking of it in terms of an investment. >> reporter: brorson says mesirow's funds have a five-year return rate topping 20%. while some investors are making
money renting land to farmers, others are making profits on a combination of rents and bonus payments from grain sales. still other investors operate the farms entirely. >> we will hire out a custom farmer to plant, fertilize and harvest. we take the crop then and we insure it. we might hedge it, sell forward. >> reporter: competition for farmland is hot and it's not easily purchased everywhere. while states like illinois and indiana let investors own farmland, iowa, kansas, north dakota, and minnesota don't. that's prompting some investors to look for land in less traditional farming states like arkansas and louisiana. economists think farmland values and investor returns will continue to appreciate as long as grain prices remain high and interest rates remain low. diane eastabrook, nbr, chicago.
>> susie: european leaders agreed today on a deal to give greece more cash so it avoids a default, and investors around the world welcomed the agreement. here are the specifics: greece will get almost $60 billion in bailout money, loans were extended for 15 years, and interest payments deferred. in return, greece has to implement wide-ranging cuts and reforms. joining us now with analysis on the deal, joseph tanious, global market strategist at j.p. morgan funds. >> susie: so, joe, is this deal enough to get greece back on its feet? >> i think it certainly is a step in the right direction. and it was certainly more generous than i think many
people had feared. however, if we're talking about getting greece back on its feet, it involves finding a way to help greece's economy actually return to growth. while some of the terms of the deals were a little more favorable than many had feared, at the end of the day, you have to find a way to help these economies grow. that probably means pausing some of that austerity. >> susie: you talk about it being a favorable deal, and you picture that other troubled companies in europe are saying, i want a deal just like greece got. what does that mean for the european economic recovery? >> i think it certainly complicates things a little bit. there is clearly an issue of moral hazard. many other countries may look to the deal that greece got and say, hey, maybe i can get a similar-type deal. in the end, when we think about what is plaguing personal europe, a lot of it has to do with austerity which has been forced on the economies, which are really, really depressed, and pushes them deeper into the hole.
part of what needs to be done moving forward is pausing some of that austerity. you can't go to a country in a very bad recession, and tell them to increase your taxes and layoff more public sector workers, because that ultimately pushes them deeper into the hole. >> susie: how do you get these economies to grow? >> one of the things you can do is pause the austerity -- >> susie: beyond the austerity, how do you get them to grow? >> you need to have some structural reforms take place, making the labor market a little more friendly, and mak making the business environment more friendly. i think a large part of it, and a big part of it is abandoning the austerity. at least until they're able to return to economic growth and slowly start piecing it in. >> susie: let me ask you
about this, wall street has been so focused on the fiscal cliff situation, how important are these issues in europe for american investors? >> i think the issues in europe are important because they've been a pain in most investors' sides for the past couple of years. if you think about the end game in europe, which probably includes some type of fiscal integration, we realize it is going to take a long time. i believe that what you are seeing in europe is creating some volatility in the markets over the next couple of years to come. however, the last action from the european central bank was a game changer. in coming in and opening up the o.n.t n.t. program bought the sovereigns a little more time to work through their issues. i think the market is going to weigh in on investors' minds over the years to come. >> susie: all right. thank you so much, joe. joseph tanious from j.p. morgan.
>> tom: an afternoon swoon in stock prices sent the major indices down, with traders pointing to little progress over avoiding the fiscal cliff for selling. less-than-encouraging comments from the top democrat in the senate came after 2:00 p.m. eastern time, pushing the s&p 500 into negative territory. it finished down one half of one percent. trading volume on the big board was 684 million; just under 1.8 billion shares traded on the nasdaq. the energy sector fell 1%. the financial sector lost nine tenths of a percent, and telecommunications continues moving down, falling another seven tenths of a percent today. the big corporate news was in the food business. as suzanne reported earlier, conagra finally has a deal to buy ralcorp, and both stocks jumped to new highs. the target, ralcorp, shot up 26.4%, closing just below the buyout offer at $90. in a sign of enthusiasm for the deal, the buyer, conagra, saw its shares jump 4.7% to its
highest price in more than a decade. all the holiday spending on televisions and mobile devices looks to be helping corning. it makes glass used in screens for electronics. the company raised its fourth quarter forecast. corning expects its specialty glass business to make up for declines in other products. shares rose 6.9%, volume tripled. green mountain coffee is best known for the k-cup single serve coffee. the company has seen big new competitors like starbucks get into the market, but green mountain continues selling plenty of coffee and brewers. after the closing bell, the company turned in much stronger than expected fiscal fourth quarter profits. it earn 64 cents per share, a third higher than estimates. while profit margins were down, it was blamed on ramping up manufacturing capacity. shares finished the regular session higher by 1.2%, closing at $28.95, their highest price since mid-september. but after raising its guidance,
shares jumped more than 23% in extended hours trading to almost $36 per share. we have a closer analysis of green mountain coffee roasters stock. you can find it at nbr.com under the "blogs" tab. look for michael kahn. as the fiscal cliff nears, so does the threat of higher taxes on stock dividends-- another three companies announced special shareholder pay-outs. casino operator las vegas sands will pay an extra $2.75 per share next month. shares rallied 5.3% to a three and a half week high. we saw more modest reactions with shares of liquor company brown-forman. its stock was up 1.9%. its special dividend totals $4 per share. avionics company heico will okayed a one-time $1.14 per share dividend. heico stock was up 1.2%. four of the five most actively traded exchange traded products were lower. the s&p 500 volatility note gained 2.1%. it usually moves in the opposite
direction of the broader market. and that's tonight's "market focus." >> susie: first, there was black friday, then cyber monday, and today it is "giving tuesday." one of every four dollars that will be given to charities this year will be donated during the holiday season. ruben ramirez reports on a new resource helping donors connect with charities making a difference in the communities they serve. >> i was feeding homeless people in grand central terminal every day. i did that for two years, 700 nights in a row. through that process, i got to
know an awful lot of homeless folks, and i kept on hearing over and over again that, while they appreciated the sandwich, what they really wanted was a room and a job to pay for it. >> george mcdonald listened and started the doe fund in 1990. its mission-- get homeless men off the streets of new york by providing housing, job training and jobs. and it works. graduates of the program are far less likely to find themselves back on the street. mcdonald runs doe much like a for-profit business, measuring program success along the way. there are 1.5 million registered 501(c)3 charities in the u.s. but finding those that have the biggest impact in the communities they serve isn't easy. large foundations, much like institutional investors, do their own research, but its more challenging for individual donors. the global philanthropy network started the social impact exchange, a group made up of non-profit organizations and
non-profit experts. they came up with something similar to a stock index, called the "s&i index" for "social and impact." only instead of publicly traded stocks, it's made up of the top charities in the country with a proven track record. the doe fund is one of those. >> if we couldn't measure it, it wasn't worth doing for us. >> reporter: at s&i100.org, donors can search organizations in their communities, review growth plans and program metrics. >> if you really want to have confidence that you're going to help a child learn to read or move a single mom out of poverty or graduate kids from the toughest neighborhoods of high school, these are the organizations that have proof that they're doing that. >> i wish that we as a society had a mind to reward programs that actually produce results every day of the year. >> reporter: ruben ramirez, nbr, brooklyn, new york. >> tom: eileen heisman is the president and c.e.o. of the national philanthropic trust, which manages over $1 billion in
charitable assets. happy giving tuesday to you. why organize a day like giving tuesday? >> i think giving tuesday is a great balance to cyber monday and black friday. we focus on buying things and consumer products so much, it is nice to think about giving back and not just thinking about buying, buying, buying. >> tom: are consumerism and charitable giving opposites? are they directly competing for the same dollar? >> that's an interesting question. one of the options is you keep it in your pocket and invest it so you can spend it or make a charitable gift or keep it in your pocket. at the end of the year, most donors i know -- in fact, 90% of the people who give give and the last few weeks of the year. i think giving tuesday is a way to give structure and focus on something people are doing anyway. i think it is exciting because there is no day in the whole year you think
now is the time to really think about giving. it is a good focus for us, and after those two days of buying, i think it is a wonderful time to say, let's give back. >> tom: we're talking about financial giving, but what is more valuable to charities, money or time, volunteering? >> that's a great question. i think it depends on the charity. for example, at a hospital, volunteers are really important, and they use them to deliver food and do all kinds of things. but in a lot of charities, using volunteer time is difficult. so you really have to look at the charity, look at what their doing, and see if your time is valuable. if you're going to volunteer, don't just do it once. do it multiple times, because by the time you train a volunteer and they disappear, it is expensive. >> tom: eileen, given the debate in washington over the fiscal cliff, are your clients seeing any impacts on donations due to expected higher income taxes next year? >> we're seeing
accelerated donations. i think people are unsure about what the taxes are going to be on charitable gifts next year. as a result of that, they would rather do something, they can gift when they know what the deductions going to be, rather than having it be a mystery. we're seeing accelerated giving, which is great, but hopefully there be a lot of charity next year as well. >> tom: eileen heisman along with us, she's with the national philanthropic trust. >> thanks. >> susie: tomorrow on nbr, honeywell c.e.o. david cote will be on capitol hill talking with republican leaders about the fiscal cliff. after that, he'll join us with the news and his analysis. >> tom: "beyond the scoreboard" tonight, google is a feared competitor, from its dominant position in internet search to the android smart phone software. now, it's getting into the game of live professional sports video. here's rick horrow.
>> reporter: google has agreed to pay the nba a figure in the low six digits to stream 350 development league games on youtube this season. the deal marks the most live games on youtube by a major professional sports league. the partnership between the nba and google's youtube is being touted as an "experiment" to see how many views and how much online ad revenue can be generated from the games. when it comes to online video, the nba is arguably the most progressive u.s. sports league, having launched a dedicated youtube channel back in 2005. but for as much of an experiment as this is for the nba, it's an equally intriguing test for google. live sports tend to be the primary reason consumers don't cut their cable cords and watch more shows on video online. if this nba/youtube experience is successful, it could signal the entry of a new player in e sports media, google. google hasn't hidden its interest in getting in the game, having been linked to the big east, english premier league,
and even the international olympic committee in recent months. with more than $45 billion in cash on hand, google can afford to play in the big leagues. i'm rick horrow. >> tom: that's "nightly business report" for tuesday, november 27. we want to remind everyone this is the time of year your public television station seeks your support. >> susie: on behalf of your public television station, thank you for your support. good night, everyone. we'll see you online at nbr.com, and back here tomorrow night. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org